ABI Published Article: "There and Back Again: Perspectives on Practicing Law While Parenting"

American Bankruptcy Institute
December 2017 Journal
Chapter 8 Humor

By Joseph Boufadel

"At a recent outing of the Monday Night Lawyers Movie Club in Los Angeles, I bombarded the group with photographs of my daughter. As a proud new parent, I assumed that everyone would love to see pictures of my favorite (and only) “mini-me” daughter, Emma, with her big brown eyes and curly dark hair. What’s not to love? After enduring the onslaught of pictures and stories, J. Scott Bovitz1 of Bovitz & Spitzer retaliated.

Bovitz: Cute photos. You should write a Chapter 8 Humor article — you know, a personal-interest story about how becoming a parent has impacted your practice.

Boufadel: I’m not comfortable writing about myself.
Bovitz: Do it. Aren’t you a millennial? Talking about yourself should come easily. Plus, maybe at least a few readers of the ABI Journal will find it interesting and refreshing to hear a different perspective on being a parent today as a bankruptcy litigator.

I know what many of you are thinking: “Who wants to hear from only a millennial?”2 Good question. Luckily, I agree with you and recruited my mother-in-law, who kindly agreed to compare notes on her experiences parenting a bunch of millennials. Some of you probably know her as Lisa Hill Fenning, who has also been an ABI member since 1992. She was a bankruptcy judge in Los Angeles from 1985-2000, when she returned to practice to pay for college for my then-future wife, Danielle, and Danielle’s three siblings.3 Along the way, she found time to sit on the boards of ABI and NCBJ, handle a bunch of mega-cases, and do some other good bar stuff. And, from my personal perspective, her kids still managed to turn out OK (“OK” equals “terrific” if they are reading this).

What follows is a discussion about our experiences in practicing law and being a parent during the 1980s, 1990s and now, and how the tools available to attorneys have evolved since that time..."

Federal Bar Association-LA's 14th Annual Bankruptcy Ethics Symposium on November 17

November 17, 2017
Time: 9:00 a.m.
Roybal Federal Building, Conference Room 283
255 E. Temple St., Los Angeles, CA 90017

Click here to register online
Click here for flyer and additional event information

    Honorable Barry Russell, United States Bankruptcy Court
Honorable Meredith A. Jury, United States Bankruptcy Court
 Honorable Martin R. Barash, United States Bankruptcy Court
Ron Maroko, Office of the United States Trustee
J. Scott Bovitz, Bovitz & Spitzer
Michael T. O’Halloran, Law Office of Michael T. O’Halloran
Carey Caruso, Law Office of Carey Caruso
Kenneth D. Sulzer, Constangy, Brooks, Smith & Prophete, LLP
Jade Brewster, Constangy, Brooks, Smith & Prophete, LLP

Program Chair: Joseph Boufadel, Salvato Law Offices

9:00 a.m. - 12:45 p.m. | Morning Programs

  • An Ounce of Discipline

  • A mixed bag of ethical issues arising with client retention, client management, and termination of the attorney-client relationship

  • Benefits, Pitfalls, and Ethical Considerations of Corporate Chapter 7 Bankruptcy

1:00 p.m. - 3:00 p.m. | Afternoon Programs

  • Competence Issues/Substance Abuse:  Carey Caruso, Law Office of Carey Caruso

  • Elimination of Bias - Recognizing and Adjusting for Bias in the Legal Profession:  Kenneth D. Sulzer and Jade Brewster of Constangy, Brooks, Smith & Prophete, LLP

MCLE: 3.5 Hours Legal Ethics; 1 Hr. Substance Abuse; 1 Hr. Elimination of Bias. This activity has been approved for Minimum Continuing Legal Education Credit by the State Bar of California. The FBA certifies that this activity conforms to the standards of approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.

Cost: $25 (FBA members); $35 (CDCBAA and LABF members);
$40 (non-members). At Door $50
Afternoon Session Only $20; FBA Member (Afternoon Only) - No Charge
Judges and Clerks - No Charge

Bankruptcy Appellate Panel affirms Court's Orders confirming Chapter 13 Plan and denying creditor's motion to dismiss on eligiblity grounds

Asset Management Holdings, LLC v. Aleli A. Hernandez, BAP No. CC-16-1228
(BAP 9th Cir. Apr. 11, 2017)

Salvato Law Offices successfully defended an appeal by a lienholder attacking the debtor's Chapter 13 plan confirmation for lack of good faith and seeking dismissal of the Chapter 13 case on eligibility grounds under Bankruptcy Code Section 109(e). The Bankruptcy Court denied the creditor's motion to dismiss and confirmed the Chapter 13 plan. The Bankruptcy Appellate Panel affirmed.


Debtor filed a chapter 7 case in 2010 and obtained a discharge, including a discharge of her personal liability on two debts secured by deeds of trust against her residence. More than four years later, Debtor filed a subsequent chapter 13 case. On her schedules, Debtor listed her residence and the two debts secured by that residence. Because the amount of the senior lien exceeded the value of the residence, Debtor indicated her intent to avoid the junior lien held by Appellant’s predecessor-in-interest pursuant to § 506(a). She listed the debt to the junior lienholder on Schedule D as a secured debt of $0, and again on Schedule F as an unsecured debt of $278,396.71.

Appellant Asset Management Holdings, LLC (“AMH”) objected to confirmation for lack of good faith and moved to dismiss the chapter 13 case on eligibility grounds. The bankruptcy court ruled that Debtor’s debts did not place her over the eligibility limits because the debt to AMH did not need to be included in the eligibility calculation. The court found that the debt should not be treated as secured because the lien was avoidable under § 506(a), nor should it be treated as unsecured because Debtor’s personal liability on the debt had been discharged in her prior chapter 7 case. The bankruptcy court also found that the plan was filed in good faith. Accordingly, the court denied the motion to dismiss and confirmed the plan, and AMH appealed.


Ninth Circuit affirms nondischargeable judgment based upon issue preclusion

Hai Lecong v. Ashley Tran, No. 15-60039 (9th Cir. Feb. 13, 2017)

Salvato Law Offices successfully defended an appeal by the plaintiff attacking the nondischargeable judgment entered by the Bankruptcy Court. 

"Hai Lecong appeals the grant of summary judgment in favor of Ashley Tran, entered by the bankruptcy court and upheld by the Bankruptcy Appellate Panel (BAP), which held that the debt was nondischargeable under 11 U.S.C. § 523(a)(2)(A). We affirm.  ***
The doctrine of issue preclusion applies to dischargeability proceedings pursuant to § 523(a). Grogan v. Garner, 498 U.S. 279, 284 n.11 (1991). Issue preclusion, or collateral estoppel, bars relitigation of factual issues that have been adjudicated in a prior action. Under the principles of “full faith and credit,” 28 U.S.C. § 1738, federal courts give prior state-court judgments the same preclusive effect as the courts of the state from which the judgment derived. Cal-Micro, Inc. v. Cantrell (In re Cantrell), 329 F.3d 1119, 1123 (9th Cir. 2003). Therefore, we apply California’s collateral-estoppel principles.  ***
We disagree with Lecong’s argument that the first three requirements of issue preclusion are not met in this case. Section 523(a)(2)(A) of the Bankruptcy Code excepts from discharge any debt for money, property, services, or credit obtained by “false pretenses, a false representation, or actual fraud.” ***
The jury verdict also affirms that these questions were actually litigated and necessarily decided. An issue is “actually litigated” when both parties “presented evidence and witnesses in support of their positions, and . . . had the opportunity to present full cases.” Lucido, 795 P.2d at 1225. Here, both parties presented evidence and argued the merits of the fraud claim. To conclude that an issue was “necessarily decided,” California “courts have previously required only that the issue not have been ‘entirely unnecessary’” to the judgment in the initial proceeding. Id. at 1226. In reaching the verdict in this case, the question of fraud was not “entirely unnecessary” in the initial proceeding. No public policy factors weigh against application of the doctrine. Therefore, Tran has met the burden of establishing the threshold requirements of issue preclusion. The bankruptcy court and the BAP did not abuse their discretion in applying the doctrine. AFFIRMED."

NY Times quotes Gregory Salvato in art recovery case

Artists Fight to Get Works Back from Ace Gallery by Jori Finkel
April 20, 2016

LOS ANGELES — Lawsuits by artists and collectors, seeking the return of consigned works, demanding profits, or both, have never stopped Douglas Chrismas, the founder of Ace Gallery, from doing business. An early champion of trailblazers like Robert Irwin, Richard Serra and Michael Heizer, Mr. Chrismas has spent nearly 50 years helping to start or jump-start the careers of artists here, even as he was scrutinized for sometimes failing to pay when works sold.

But on April 6, Mr. Chrismas lost the keys to his gallery, after failing to make a $17.5 million court-ordered payment to settle his debts in a long-running Chapter 11 bankruptcy case. Sam Leslie, a bankruptcy trustee, took over as what he calls a “de facto C.E.O. of the reorganized business,” which includes a 30,000-square-foot mega-gallery in a historic Art Deco building in the mid-Wilshire district, and a space in Beverly Hills.

De Wain Valentine is one of a handful of artists who filed claims during the bankruptcy case, seeking back payments or return of artwork, bringing to light the sort of artist-dealer disputes that often remain behind closed doors...

He is seeking the return of eight early, experimental sculptures, made in resin or acrylic, consigned to Ace in 2010 to 2012. The group includes a study for his monumental “Gray Column” sculpture once featured at the Getty Museum. His claim placed their value at around $1.45 million.

“The artworks are not on display at the gallery,” said Mr. Valentine’s lawyer, Gregory Salvato, “so we don’t even know for sure whether they’ve been sold or if they’re in storage.”

Asked in an interview last week why he had not returned the eight artworks, Mr. Chrismas said, “It’s complex because we believe De Wain owes the gallery a large chunk of money.”

Mr. Salvato responded, “We have absolutely no idea what he is talking about.” Mr. Valentine said, “He’s never advanced me any money.”

Reversal of $3 million judgment affirmed on appeal in published opinion

Dhawan v. Biring, 241 Cal.App.4th 963 (Cal. App. 2d Dist., October 28, 2015)

Salvato Law Offices successfully reversed a $3,200,000 default judgment entered more than seven years earlier that was affirmed by the California Court of Appeal in a published decision.

A recent California Court of Appeal decision re-affirmed the longstanding rule that damages in a default judgment cannot exceed the amount of damages claimed in the complaint, and that a later-filed statement of damages specifically identifying the damages sought is no substitute for an amended complaint, at least in an action not involving personal injury or wrongful death. Dhawan v. Biring, 241 Cal.App.4th 963 (Cal. App. 2d Dist., October 28, 2015).

In Dhawan, The Second District Court of Appeal held that a default judgment is void on its face and subject to attack at any time where the default judgment awards damages that exceed the relief demanded in the complaint, citing Code of Civil Procedure Section 580(a). A complaint seeking monetary damages must state the amount of damages sought. Code of Civil Procedure Section 425.10(a)(2). Any amount awarded in excess of the amount stated in the complaint is beyond a court’s jurisdiction to grant, and the resulting judgment is void. Section 580(a). Furthermore, service of a statement of damages under Code of Civil Procedure Section 425.11 or 425.115 only satisfies the requirements of Code of Civil Procedure Section 580 when the law prevents a plaintiff from stating an amount of damages in the body of the complaint; i.e., in personal injury or wrongful death cases, or where the plaintiff is seeking punitive damages. In all other cases, a statement of damages does not substitute for an amended complaint, as it does not provide formal notice of the actual damages sought in compliance with the requirements of Section 580(a).

The plaintiff in Dhawan filed a complaint that did not specify the amount of damages, seeking merely an award of damages “according to proof.” Defendants failedto answer the complaint. At the default hearing -- likely at the instigation of the trial judge – the plaintiff moved to vacate the default so that he could personally serve a statement of damages on the defendants. Plaintiff subsequently filed and served a statement of damages, identifying each category of damages and the amount sought. Defendants again did not respond, and a default judgment was entered.

Nearly seven years later, defendant Biring moved to vacate the default judgment, contending that a default judgment in excess of the amounts demanded in the complaint is void, and merely voidable, because the award was in excess of the trial court’s jurisdiction. (Code Civ. Proc. § 580(a)). That is, the trial court did not have the power to enter a default judgment that exceeded the relief sought in the complaint, and such an excess damage judgment could be set aside at any time. (Code Civ. Proc. § 473(d)). The trial court agreed and vacated the default judgment. On appeal, plaintiff argued that defendants had actual notice of the lawsuit and the precise amount of damages sought, as they did not contest receipt of the statement of damages. At most, plaintiff argued, the judgment was merely voidable, and not void. And, as the time period to challenge a voidable judgment had long since passed, the default judgment should not have been overturned.

The Court of Appeal rejected each of the plaintiff’s arguments and affirmed the court’s order setting aside the default judgment. Even though it contained the same information, a statement of damages was not a substitute for a properly amended complaint. And, where the plaintiff had sought only “damages according to proof,” the original trial court had exceeded its jurisdiction in awarding any damages at all.

Article on Bankruptcy Removal & Remand

Article by Gregory Salvato and J. Scott Bovitz. Dated December 8, 2010.

Download written materials.

This paper summarizes the removal procedure under 28 U.S.C. § 1452 and Federal Rule ofBankruptcy Procedure ("FRBP") 9027. We will answer these questions.

  1. What claims can be removed under 28 U.S.C. § 1452?
  2. Who may remove claims under 28 U.S.C. § 1452?
  3. What are the limitations on removal jurisdiction?
  4. What should the notice of removal contain?
  5. Where does a party file a notice ofremoval?
  6. What are the deadlines for removing a claim?
  7. May a party remove fewer than all claims in the action?
  8. When does removal take effect?
  9. Where do removed cases "go"?
  10. If a matter is removed before an answer is filed, when is the responsive pleading due?
  11. When a state court action is removed, what is a party to do? a. Deadline for a motion to remand. b. Motion to remand under 28 U.S.C. § 1452(b). c. Motion to abstain.
  12. Can and order ofremand or abstention be reviewed on appeal?
  13. Can a court award sanctions for improper removal?
  14. Why bother to remove claims from state court to bankruptcy court?